Chinese Expert: "China's Ministry of Commerce May Block Nvidia's Acquisition of ARM"

Concerns Over US Controlling China's Semiconductor Industry
NVIDIA's Acquisition of ARM Requires Review by China, UK, EU, and Others

[Asia Economy Reporter Naju-seok] Regarding the acquisition of the British semiconductor design company ARM by the American semiconductor company Nvidia, there are speculations that the Chinese government may not approve it. China may try to prevent its semiconductor industry from falling under U.S. control.

On the 28th, according to Chinese media Xinlang Caijing, Ni Guangnan, an academician of the Chinese Academy of Engineering, said at a forum that Nvidia's acquisition of ARM is "definitely very unfavorable to us" and added, "I believe the Chinese Ministry of Commerce may disallow the merger and acquisition."

ARM is a company that sells the Instruction Set Architecture (ISA), which is fundamental to semiconductor design, and its clients include Apple, Samsung, Qualcomm, and Huawei. This British company has been wholly owned by the Japanese SoftBank. Nvidia recently officially announced its intention to acquire ARM from SoftBank for $40 billion (46.95 trillion KRW).

[Image source=Reuters Yonhap News]

Within China, there have been various analyses suggesting that Chinese regulatory authorities might disallow Nvidia's acquisition of ARM. For Nvidia to acquire ARM, it must obtain approval from antitrust regulators in the U.S., the U.K., the European Union (EU), and China. Nvidia had anticipated that the acquisition would be completed in about 18 months, considering the regulatory review schedule.

China's caution regarding Nvidia's acquisition of ARM stems from significant concerns that the U.S. could make it difficult for Chinese semiconductor companies through sanctions and other measures. China particularly views the semiconductor sector as a weak point in its industrial structure. This is also why companies like Huawei and ZTE are vulnerable to U.S. sanctions.

Sebastian Hou, Head of Technology Research and Managing Director at Hong Kong-based investment analysis firm CLSA, recently expressed a similar view. In an interview with CNBC, he said, "ARM provides semiconductor chip designs, which are core technologies for smartphones, to technology companies worldwide," and mentioned that the Chinese government would want to avoid Nvidia owning ARM.